Czech virtual currency update

The new Czech virtual currency, Czech Crown Coin (officially named by the authors “CZC”) was for the first time offered to the public this week (Tuesday, 19th August) at noon, as part of a press conference held by its founders. The interest of the public in purchasing CZC was bigger than expected. The pre-mined amount released in the initial edition of 100,000 CZC was sold out within nine and half hours, whereby a third of this limited amount was sold already within the first hour! It is planned that within the next days, an additional set of 100,000 CZC will be offered to the public. After these ten days (on Friday, 29 August) an exchange platform will be opened on the official website of CZC.

This new virtual currency might become very interesting also from the miners’ point of view, as with the same technical equipment they should be able to achieve higher gains from the mining activity, than they would when mining other well known virtual currencies.

As indicated by the founders of CZC, the initial goal of this project was to support Czech e-business. From the first day it would appear that the project has met its goal, as the public is obviously interested in buying CZC and getting involved in this virtual world. From this point of view, it is important to point out that the currency reached this week 1.25 CZK (Czech Koruna) for 1 CZC, which made it more expensive than the official Czech currency, as well as the 16th most expensive virtual currency in the world. Even though this is very good result after the first day on the market, considering the high volatility of the virtual currencies it will be more interesting to observe the next evolution of this currency.

The founders are now having a new goal, which is, to make CZC to a massively used mean of payment. To reach this they are getting in touch with various Czech retailers who are already involved in e-business and could accept CZC as consideration for their supplies. As the area of virtual currencies is currently not regulated by Czech law, the expansion and usage of these type of currencies will for sure open new discussions concerning the tax and legal implications. Taxation concerns all the involved persons, starting by miners, through owners of the currency and retailers. All activities must be thoroughly reviewed with respect to corporate, personal income tax as well as VAT taxation. PwC is monitoring the development in various countries in order to understand all potential queries our clients might have and to be able to support them in this legal vacuum.

Should you be interested in obtaining more information on CZC or other virtual currencies, please contact our subject matter specialist, Ms Petra Safkova at petra.safkova@ch.pwc.com or +41 58 792 9543.

About Andras Salanki

Manager PwC Switzerland email: andras.salanki@ch.pwc.com Office: +41587924536

Andras Salanki is an international VAT advisor with 7 years of relevant professional experience. He spent one year on secondment in California, US, where he advised US multinationals on global VAT projects and also gained experience with IT and Internet companies based in the Silicon Valley.